Federated to Buy Joseph Horne, Merge it into Lazarus
NEW YORK -- Federated Department Stores plans to enter the Pittsburgh and Erie, Pa., markets by purchasing the troubled 10-unit Joseph Horne Co. and combining it with its 40-unit Lazarus division. Federated said Friday it has signed a letter of intent...
NEW YORK -- Federated Department Stores plans to enter the Pittsburgh and Erie, Pa., markets by purchasing the troubled 10-unit Joseph Horne Co. and combining it with its 40-unit Lazarus division. Federated said Friday it has signed a letter of intent to buy Horne's. That confirmed a WWD report, April 28, of a possible sale.
A purchase price was not disclosed, but Federated said the deal is expected to close by late May or early June and would give more details of the acquisition at that time. By fall, the Horne stores will be renamed Lazarus, the company added.
The deal will most directly affect the 250 staffers in Horne's central office, many of whom are likely to be out of work. Federated said each will be interviewed by Lazarus management during a six-month transition period.
"Assuming the deal goes through, there could be opportunities in Lazarus in Pittsburgh, in Lazarus's Cincinnati offices and with Federated," a Federated spokeswoman said. Lazarus and Federated are both based in Cincinnati.
Horne's has a total work force of 2,000.
Michael L. Pulte, Horne's chairman, chief executive and president, said he did not know whether he would remain with the company.
Lazarus ranks as Federated's fourth largest division, registering 1993 sales of $965 million. Abraham & Straus/Jordan Marsh is the largest division, with $1.39 million in sales last year, followed by Burdines and Bloomingdale's. Federated also operates Rich's, The Bon Marche and Stern's. Horne's has been on the block since the beginning of the year. It lost $8.5 million in the nine months ended Oct. 31, 1993 and posted sales of about $215 million in 1993.
Federated said due to operating efficiencies arising from the merger, it expects the Horne stores to be profitable in 1995. However, one-time costs associated with the merger will cut into Federated's 1994 earnings. Allen Questrom, Federated's chairman and chief executive officer, in a statement, called Federated's expansion into Pittsburgh, a market with two million people, a "strategic growth" move.
Federated officials said Lazarus and Horne's serve markets with similar demographics and that the stores from both companies are similar in size. The average Lazarus unit is 153,000 square feet, while Horne's stores average 149,000 square feet."We believe that by merging these stores into the successful Lazarus operation they will benefit from added merchandising strength, increased operating efficiencies and vastly improved economies of scale, which will result in improved sales and earnings performance for all of Federated," the Questrom statement added.
Federated is also engaged in an attempt to merge with R.H. Macy & Co.
Horne's was a division of the former Associated Dry Goods until 1986, when May Department Stores took over ADG and divested Horne's to a group including Equitable Assurance, Mitsui USA and Massachusetts Mutual Life Insurance, the principal shareholders.
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